A country in extremis

It was while applying for a job with a certain socialist party active in New York City that I came across a piece of information for which I have no words. There is a number, prominent in econometrics, known as the Gini coefficient (named for Italian statistician Corrado Gini) which serves as a standard metric of income inequality. The GC is a binary variable (0 is equality, 1 is inequality), equivalent to the area between the Lorenz curve and what is known as the line of equality (f(x)=y) divided by the total area under the line of equality. The Lorenz curve itself measures income distribution, where x is a percentage measure of households and y is a percentage share of income. The Gini coefficient thus effectively reports how far a certain country's income distribution differs from a situation of perfect equality.

As of 2004, Sierra Leone was, by Gini measure, the least equal country on earth, with a score of 62.9. That should be unsurprising to anyone who's kept even a toe in the news over the past few years. Along with Japan and the Czech Republic, the usual suspects, Norway, Sweden, Finland and Denmark, hover around most equal, with coefficients in the mid-twenties. With these as benchmarks, it should be an outrage to each and every American to learn that the United States has more in common, in terms of income distribution, with an African nation devastated by a sometimes cannibalistic civil war fought largely by child soldiers, than those stable, usually just, socially generous and therefore widely-admired Scandinavian democracies. With a score of 43.2, the United States has beaten the absolutist regime of Turkmenistan for unevenness in the distribution of national wealth. The fury I feel at this number is overwhelming, since I've spent some time becoming familiar with the mind-numbing brutality of Central Asian politics. I have a very vivid picture of what life in these former Soviet Socialist Republics is like. Uzbekistan, whose mentally depreciated ruler, Islam Karmimov, has been known to boil political dissidents alive, may take the cake for most nauseating regime in the region, but Turkmenistan is maintaining a close, if not narrowing, second, if only due to its extreme and enforced isolation. Uzbekistan's largest city, Tashkent, has the honor of being the largest in the region, and, as such, is somewhat difficult for authoritarians in the present regime to keep under control. Turkmenistan, by contrast, is so sparsely populated that its faux-Napoleon, Gurbanguly Berdimuhamedow, has kept contact with the outside world to a minimum comparable to the trickle that passes through a pin-prick in a water balloon. Beating Turkmenistan's inequality score is, in other words, more than embarrassing: it's simply atrocious. How did this come to pass?

I believe it was Will Rogers who thought up the phrase 'trickle down', but, certainly, the driving force behind bringing it into unquestionable existence was solely the Republican party circa 1980. It was with Ronald Reagan as a frontman, of course, that the party sold Americans on the idea of slashing tax rates on the highest income brackets. What was the philosophy that underpinned Reagan's supply-side economics, as it continues to do so today? I've spent a good deal of time researching the answer, in the hopes of finding something more compelling than my own knee-jerk assumptions, but I've come across nothing, really, to contradict them. It seems that the layman's take is accurate enough: give money to the rich in the form of tax cuts and they will reinvest it in businesses, thus creating more labor demand and raising wages across all income percentiles. The phrase 'a rising tide lifts all boats', now all too familiar, sums up quite accurately this philosophy, though it misses the fact that some boats will be five-hundred times bigger than others, and that they will therefore control far more of the water and so be able to bully far more boats than others can. That was the part of the message that was not advertised by the new Republican party, and for good reason. Had Americans known how bad the deal was that they were being offered, there was a good chance that they would've rejected it out of hand.

And now, thirty years on, we are faced with the incontrovertible fact that all the rhetoric really was just a scam. Of course, it wasn't as if no one at the time said anything to challenge it. The Gini coefficient, for example, has been around for almost a hundred years, and during that time, the accuracy and quantity of data available to apply it to has grown exponentially. It was also probably simple common sense to many in 1980 that the New Right's revolution was really just a poorly-disguised coup, one meant to unseat the radicalism of the 60's and 70's and the earlier social provisions of Roosevelt's New Deal, thereby reinstating a strictly hierarchical economic and political order. The Republicans were, in the stagnant economic climate of the 70's, offered the chance of a political lifetime, and they jumped on it like rabid wolverines. Now we, the children of their revolution, are living the consequences. I think that I'm not alone in recognizing how unjust those consequences are.

What happened? In 1980, our income distribution had a Gini coefficient of 36.5, not so much higher than that of other 'developed' nations. Today, we rank alongside blatant plutocracies and vicious totalitarian regimes for how unevenly we have spread our national wealth. Nothing else, I think, characterizes the America of the past thirty than this degree of inequality. I know that fact viscerally. Though people are no doubt tired of hearing it from me, New York City is the absolutely unchallenged exemplar of what has been an unstoppable trend in the nature of the American economy for the past three decades. As this article in the New York Times attests, the richest in New York County make $365,826 a year and the poorest, $7,047. I don't think I need to say anything about those numbers. I trust the intuition of my readers, and the orientation of their moral compasses, to assess just how brutal a difference like that could make life for the poor on an island no more than 22.96 square miles in area.

In 1980 (though I have no statistics on which to base this assumption) such an unbridgeable gap would've been unthinkable. The poor were unquestionably in the majority, and the rich were silent, inconspicuous, and afraid. Today, the poor of New York, just like the poor of every other state, have been abandoned and effectively do not exist. The front page of any major newspaper is enough to fill anyone with even an inkling of what life is like for 'the other America' with despair. Everywhere, the achievements of the 'young' and the 'creative' are lauded, and no attention is paid to the total marginalization of the lowest income quartile. The crumbling ruins of rural and urban America, those places that were left to the poor, have disappeared from the national consciousness as wave upon wave of young, suburban-born, upper middle-class whites rises to command every outlet of media. Raised with Gilded Age values, this cohort has internalized economic hierarchy, so that its primary concern has been constructing for itself a closed community catering to in-group tastes and, more importantly, in-group financial security. The result has been to inflate the poor out of existence. The Census Bureau, for example, reports a dramatic increase between 2000 and 2008 in the number of residents of Brooklyn who hold Bachelor's degrees. Of those residents, 41% are white, 36% black and 20% Hispanic (as census categories, white and Hispanic overlap, meaning that the number of non-Hispanic whites is even lower). While for years the number of whites in Brooklyn has declined precipitously, in the last ten years that trend has begun to reverse. Who are these whites, and where do they come from? Only 24.8% of foreign-born residents in Brooklyn are of 'European' ancestry, and the majority of these are Eastern Europeans moving into Slavic enclaves in Greenpoint and Sheepshead Bay. The new white Brooklynite is American and is rich: from 1980 to 2000, the 290% increase in the number of households making more than $150,000 a year is captured almost entirely by this group. They are also, not coincidentally, almost all college graduates. As for the non-white population? Levels of tertiary education have remained flat. Of course, administrators and elected officials have called this a great victory and have tried to keep it going, allowing an even greater flood of already well-off migrants into disadvantaged areas, so that the same pattern continues, year-on-year, further marginalizing the poor. It should be no surprise, then, that from 1990 until now, the neighborhoods with the fastest growing black and Hispanic populations, Canarsie and East New York, are not only as far from Manhattan as one can be in the borough, but are also statistically the most grim.

I'm not going to rant about gentrification--I've done that enough before. What I'm trying to convey is the insidiousness of economic inequality. It is more than an issue of unequal access to consumer goods or housing. Inequality is a death sentence for democracy. Fundamentally, political systems are differentiated by how they distribute power. The very fact that our political terminology uses the Greek suffix kratos (power) is an indication of how fundamental the idea is to our very conception of politics. In a democracy, we expect power to be as widely distributed as it can functionally be, that is, that the amount of power held by one person varies only within a narrow margin relative that of another. The merit of such a political system is that it denies a single individual the ability to reach a high degree of utility at the expense of another's well-being. In a democracy, it is ostensibly the rule that one cannot, for instance, put another to death for petty reasons, nor compromise their livelihood or the means by which they secure it. That is the meaning of the phrase 'life, liberty and the pursuit of happiness'. The benefit to us is of course personal, as well as familial and communal security, but it is also something more: a powerful psychological guarantee of agency, the promise that no one will ever run into insurmountable barriers to the maintenance of their well-being. That guarantee has been compelling enough for men to risk, and too often lose, their lives in pursuit of it.

But something happened in 1980, something that I am unable to explain and, having been born and raised after the fact, unable to imagine. Somehow, the idea that individual success was not contingent on the utility of others became extremely fashionable. So masses of Americans, and indeed masses of those who followed their example, adopted the view that political decisions which were deemed to disadvantage them in any conceivable way, or in any conceivable future way, were unacceptable. Tax increases, always controversial, became downright unacceptable, even if they were explicitly targeted at a tax bracket which only 5% of Americans had attained. As long as the potential theoretically existed for you to be in the top 5%, even if that possibility remained utterly remote, it was common sense that policies which were aimed at curtailing personal wealth were affronts to each and every individual American. As long as a certain class of people--a very wealthy class--could convince the vast majority of decidedly non-wealthy people that there was the chance that they might hit the jackpot, politics turned away from its post-New Deal progressive agenda towards what was in essence a casino scam. It was a scam, one that convinced huge numbers of people not only that they would be fabulously wealthy, but that they should be. If you were going to get rich, why care about the Gini coefficient? The poor were, as the Social Darwinists of the nineteenth-century had maintained, losers. Why blame you for being successful just because they weren't?

Now, of course, it's time to pay the piper, and everyone is looking for a scapegoat--Wall Street, Washington, China, anything. We haven't yet confessed our part in the crime. While everyone is willing to concede that greed somehow brought us to the brink, few admit that it was their own greed--their own belief that they could be rich, no matter what--and their willingness to empower politicians who valorized it--that was ultimately responsible. Comedy Central's 'The Daily Show', while ripping into financial news networks two weeks ago, played a clip in which a certain broadcaster affiliated with CNBC jeered at the idea of bailing out struggling homeowners while on the floor of the Chicago Mercantile Exchange and with the vocal support of the traders around him. The response to the clip was predictable, and not entirely unjustified: the audience booed, Jon Stewart laid into the fatcats, and eventually CNBC hauled out one of its personalities kicking and screaming to shoulder the blame. Many, of course, felt rightfully angry at the hubris of the 'investment class'. Many more, unfortunately, were looking for somebody to tar and feather for bursting the bubble that they themselves had helped to inflate.

It is absolutely unquestionable that the financial industry--and the many MBA- and business degree-totting 20-year-olds who staffed it --engaged in criminal activities and deserve severe punishment under the legal statutes of this republic. To say, however, that our downturn is merely the fault of a few thousand business-school graduates working in the Financial District is to show willful ignorance of the more important cultural truth now at issue. America is not, and has not been for many years, a country of nose-to-the-grindstone productivity married to Protestant thrift. Americans are debtors; we possess a set of skills only useful when economic surplus in industrially active nations has reached a point at which it can begin to be invested in our services. For decades we have been told by others, and have told ourselves, that it was not only economically smart, but far more prestigious, to work towards an occupation which had as its outcome no physical product. The sprawl of strip malls and, in cities, 'creative' industries, such as restaurants and boutique retail outlets, should serve as ample evidence that the only outcome of this 'economic revolution' was a people valuable solely as servants. We took orders for a very limited set of tasks and delivered what was requested, but at no point in that process did we produce a substantial material product. Now, with the requisite surplus, for so long provided by Asian and Middle Eastern capital, gone, we have been forced to face reality: the world does not need as many 'information technicians' and service workers as we believed.

Now, what, you ask, has any of this to do with inequality and the distributive framework of power? Simply put, service jobs are the foundation of unequal decision-making. The average service wage, according to the US Bureau of Labor Statistics, is $11.36 an hour, the lowest average wage among all categories of occupations studied by the BLS. The Census Bureau says that 70% of economic activity is classified under the service sector. In other words, a very large number of Americans work in a sector that has only a marginal economic return. In addition, that sector is only 11.6% unionized. Service workers therefore have very little power in the workplace, and even less, given their income potential, in the market. They are marginalized political actors. It is no wonder, then, that American electoral results have been skewed towards issues which claim more emotional than intellectual resonance: people have been looking for easy outlets for their frustrations, and they've found them in the moral struggles engineered by opportunists in right-wing parties. The double-trap of inequality is that as it worsens, it weakens the basis upon which a successful redistributive campaign could be based. What results is the situation of today, in which a large segment of the enfranchised American population is unable to discern, when voting, between members of the political class who do, and do not, represent their interests.

I don't think that there is any accident or cultural idiosyncrasy behind success of Scandinavian democracy. Sweden's restructuring of its banking industry in 1991 is an excellent example of a difficult and costly process that was handled with public interests upheld over private. It was also ultimately profitable for taxpayers. It is, of course, an old rhetorical device--as old as Tacitus's Germania, at least--to criticize one's own society by praising another's. There are obviously plenty of problems in Scandinavia that Scandinavians have not yet arrived at proper solutions for, and it would be silly to ignore them. I cannot, however, ignore the fact that the distance between our level of income distribution and Sweden's is as strikingly similar to the distance between the inefficient workings of our public institutions, and the dull-witted responsiveness of our public, and the diametrically opposed workings and wittedness of them and theirs. If there is any issue that the Democrats could use to redefine themselves as a party--and God knows they need a spine, in the wake of the Bush years--income inequality seems to fit the times. One can only hope that the same class that brought us the current disparity is not the same one that has been elected to fix it.